Methods of generating sequence diversity in a protein, such as a ligand-binding protein, are provided. The methods comprise targeted introduction of two or more recombination signal sequences (RSSs) into the protein coding sequence and introduction of the modified protein coding sequence into a recombination-competent host cell, specifically a recombination-competent host cell that is capable of expressing at least RAG-1 and RAG-2, thereby allowing for recombination of the protein coding sequence and expression of variant proteins. Also provided are polynucleotides comprising a nucleic acid sequence encoding a target protein, such as a ligand-binding protein, and comprising two or more RSSs, and compositions and host cells comprising same.